American Realty Investors Inc Reports Mixed Q3 2023 Results
Net income attributable to common shares decreased significantly to $3.0 million in Q3 2023 from $302.3 million in Q3 2022.
Rental revenues rose by $4.3 million, driven by multifamily property acquisitions.
Net operating loss improved, decreasing by $1.1 million compared to the same period last year.
American Realty Investors Inc secured a $25.4 million construction loan for a new multifamily property project.
On November 9, 2023, American Realty Investors Inc (NYSE:ARL) released its earnings report for the third quarter of 2023, revealing a significant decrease in net income attributable to common shares, which stood at $3.0 million or $0.18 per diluted share, compared to the substantial $302.3 million or $18.72 per diluted share reported in the same period of the previous year. This stark decline is primarily attributed to the gain from the sale of the VAA Sale Portfolio in 2022.
Financial Highlights and Results
The company's total occupancy rate was 79% at the end of the quarter, with multifamily properties performing strongly at 96% occupancy, while commercial properties lagged behind at 49%. Notably, American Realty Investors Inc paid off a $1.2 million loan on Athens and secured a $25.4 million construction loan for a new 216-unit multifamily property in McKinney, Texas.
Rental revenues increased by $4.3 million, from $7.6 million in Q3 2022 to $11.8 million in Q3 2023. This increase was primarily due to a $5.0 million rise in revenue from multifamily properties, which offset a $0.8 million decrease from commercial properties. The acquisition of the VAA Holdback Portfolio in 2022 played a significant role in boosting multifamily revenue.
Net operating loss saw an improvement, decreasing by $1.1 million from the previous year's $3.2 million to $2.1 million in the current quarter. This reduction in net operating loss is mainly due to decreased legal costs.
Income Statement Analysis
While total revenue for the quarter increased to $12.5 million, up from $8.3 million in the same quarter of the previous year, the company's operating expenses also saw a change. Property operating expenses rose to $7.4 million, depreciation and amortization increased to $3.3 million, and the advisory fee to a related party was $2.3 million. However, general and administrative expenses decreased from $3.0 million to $1.6 million, contributing to the reduced net operating loss.
Interest income was favorable at $9.0 million, an increase from $7.0 million in Q3 2022, while interest expense decreased from $4.0 million to $1.9 million. The equity in income from unconsolidated joint ventures was reported at $234,000, a significant decrease from the previous year's $464.1 million, which included the gain from the VAA Sale Portfolio.
Balance Sheet and Cash Flow Insights
The earnings report also provided insights into American Realty Investors Inc's balance sheet and cash flow, although specific details were not disclosed in the summary provided. The company's financial position, including assets, liabilities, and equity, as well as its cash flow from operating, investing, and financing activities, would be critical for investors to assess the company's liquidity, financial health, and potential for future growth.
In conclusion, American Realty Investors Inc's Q3 2023 earnings report presents a mixed picture, with increased rental revenues and reduced operating expenses being overshadowed by a significant decrease in net income attributable to common shares. The company's strategic moves, including the payoff of existing debt and the acquisition of a new construction loan, indicate ongoing efforts to strengthen its portfolio and position in the market. Investors and potential members of GuruFocus.com are encouraged to delve deeper into American Realty Investors Inc's financials for a more comprehensive understanding of the company's performance.
Explore the complete 8-K earnings release (here) from American Realty Investors Inc for further details.
This article first appeared on GuruFocus.
